Online Business L(a)unch™ > Legal Matters: Form Your Business

form your business: the right structure

Besides deciding what product or service to sell, choosing the right business structure for your particular business is one of the most important decisions you’re going to make.

The legal structure you choose depends on a number of factors including the type of your business, the potential risks and liabilities of your business, your business goals, financial factors, individual situation, etc.

You have three basic business structures from which to choose (please note, this in NOT a legal advice - just a quick overview):

1. Sole proprietorship

2. Partnership (limited or general)

3. Corporation (S, C or LLC)

Most of new small business owners (if they work solo, of course) begin as sole proprietors because it's cheap, easy and fast to establish: there's no cost to set up a sole proprietorship and no legal forms to fill out unless you choose using a different name ('trading us' or trade name)  instead of your real name. You can open or close the business at any time and you're in full control of the company's operations. Your profits will be reported on your personal tax return.

The downside is that you have unlimited personal liability for your business: it means that if anything goes wrong,  all your assets and income can be taken to satisfy the claims of your creditors. In addition, getting financing for a sole proprietorship can be difficult too.

But it's always possible to start business as a sole proprietorship, then incorporate your business later as your business changes.

To understand the basics of the legal structures available so you can decide what business structure makes the most sense for you, visit Business Filings Research Center. You will find detailed information about business structures, things you need to consider when deciding in which state to incorporate your business, the basic requirements of incorporating in each state, etc.

Then talk to your CPA (accountant) who most likely will answer all of your questions and help you choosing the right structure for you with no charge.

file your business

If you decide that corporation is the best structure for your business, incorporating online is obviously going to be much cheaper for you than using a lawyer or CPA services.  I highly recommend using Business Filings services - I incorporated my own business with BFi and was pleased with their service and prices.

With Business Filings filing your incorporation papers online is very easy and fast (7-10 business days).  BFi offers an excellent customer service: you can use Life Chat and easy get answers to your questions while you’re online without having to pick up the phone.  BFi allows you to track the status of your incorporation online - including shipments that are on their way to you - and pay any invoices.  The prices are very competitive; you can get instant fast quote on their website.

Next Step: Obtain Tax ID